Earnings call transcript: Adcore reports Q1 2025 results, highlights APAC growth

Adcore Inc. (NASDAQ:ADCO) reported its financial results for the first quarter of 2025, highlighting a 2% year-over-year revenue growth to $7 million and a significant reduction in net loss by 49% to $200,000. Despite these positive financial metrics, Adcore's stock experienced a 5.45% decline, closing at $0.26 per share. The company attributes its strong performance to robust growth in the APAC region, while facing challenges in EMEA and North America. According to InvestingPro analysis suggests the stock is currently undervalued. The company has shown impressive momentum with a 61.76% return over the past six months, though investors should note its beta of 1.69 indicates higher volatility than the market. For deeper insights into Adcore's valuation and 8 additional ProTips, consider exploring InvestingPro's comprehensive analysis tools.

Outlook & Guidance

Adcore remains confident in achieving a 25% growth target for 2025, driven by a focus on AI-powered innovations and an expected increase in SaaS recurring revenue. The company is optimistic about its performance in the upcoming quarters and anticipates the full release of its Proposalie App in the second half of 2025.

Executive Commentary

CEO Omri Brill expressed optimism about the company's growth trajectory, stating, "We started 2025 in the right tone," and emphasized the potential of AI-driven innovations with, "We see a lot of innovations that are AI powered."

Risks and Challenges

• Regional revenue declines in EMEA and North America due to stopped activities.
• Macroeconomic factors affecting performance in different regions.
• Dependence on continued growth in the APAC market.
• Execution risks associated with new product launches like the Proposalie App.
• Competitive pressures in the AI-driven software market.

Q&A

During the earnings call, analysts focused on the growth potential of the MediaBlast App and the company's regional performance. Questions also addressed the expected revenue impact of the Proposalie App once fully launched in the latter half of 2025.

Full transcript - Adcore Inc (ADCO) Q1 2025:

Nick Campbell, Head of Investor Relations, Agcor: Okay. Good morning, and welcome to Agcor's Q1 earnings call. This morning, you might have seen a press release putting out our q one financial results, highlighted very strong growth in our APAC region fueled by MediaBlast and new client acquisition in the region. Today, we will review those results in more detail.

On the call today, you have myself, Nick Campbell, head of IR. You'll hear from Ulmery Brill, Agcor CEO and founder, and finally, Amit Conforti, Agcor CFO. The agenda for today, we'll begin with some forward looking statements you should be aware of when listening to this call, followed by the CEO opening remarks, followed by the CFO financial highlights and finally, finishing off with Q and A. If you do have a question during this call, please use the feature in Zoom to submit a question, and we will answer it at the end. Before we begin, please be advised there are some forward looking statements will be may that will be made today that are somewhat inherent in nature as they are forward looking.

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I will give you a moment to review the statements now before we begin, so take a minute to do so. Okay. And with that, I will move it over to Omri Brill for the CEO opening remarks. Omri, floor is yours.

Omri Brill, CEO and Founder, Agcor: Thank you very much, Nick, and it's my pleasure to be here today and talk about the company financial results for q one twenty twenty five. And thank you for all the participants that join our call today. Let me share my screen, and we can begin with my remarks. Okay. So I think, like, all in all, when they on the first glance of the company financial results, you can see, okay.

It's not like a a it's not like something to write to a mobile. Right? Let's say, top line revenue went up a bit. You know, like, a gross profit remain more or less the same. Some improvement in profitability, but I would say, okay share okay share quarter.

But, actually, when you take a deep deeper look at the quarterly result, there's actually a lot of things we should and could be proud about, and I wanna walk you through some of the stuff that get us excited about this quarter result and why we are still very much bullish regarding the entire year of 2025. So I would say just like something that was mentioning, obviously, is strong cash growth, you know, year on year, positive operating cash flow and record break breaking momentum in media blast application that some of the stuff that get us excited about this quarter results. And just like a quick run through, so top line revenue this quarter was 7,000,000 compared to 6,900,000.0 in the previous year. That's represent 2% year on year growth. Gross profit remained similar, 03/2001 compared to 3.1 in the previous year.

If you look at what we call a a quality growth KPI, that's for us, it's gross profit, gross margin, and we can definitely see numbers of where we want them to be. Gross margin in q one twenty twenty five was 44%. That's exactly more or less in the middle between 4050%, which is the range we wanna see. And gross profit, again, 3,100,000.0. That's that's solid start of the of the financial year.

And if you look sorry about that. If you look about the cash positions, and we can definitely see there's a cash position remain high, 10,600,000.0 compared to 10,800,000.0 in the previous quarter. And I I know there was some discussion whether we see because of seasonality drop between q one to q four, and I'm glad to see this wasn't the case. Right? Cash position still remain high, which is obviously a positive thing for the company.

And so just, like, run quick run regarding the the report highlights the way the company or management see it. Again, strong cash position at 10,600,000.0, and they are up by 30% year on year. A lot of that is thanks to, let's say, deposit we see coming to the electronic wallet from our media blast app. So there's a lot of more activity, and you can see the numbers there in the in the following slide to see the momentums that we are gathering in this specific app. And we also see positive operating cash flow of $2,200 so sorry, 63,000 compared compared to 13,000 in the previous year.

So big jump over there in in cash flow that generated from operation activity. Revenue growth, again, 2% year on year and to 7.7 sorry, 7,000,000. And we saw a reduction in net loss to around 200 k compared to almost 400 k in the in the previous year. So again, company is, let's say, more operationally efficient, and we also saw positive adjusted EBITDA of 208,000 compared to 2,000. So in this quarter compared to 3,000 in in the last year as well.

So, again, in most of, let's say, the key indicator, the way we see it, we saw a positive move this quarter, and it's still a, I would say, very strong quarter for the company. And now to the MediaBlast app. MediaBlast, it's an application we large launched around two years ago, and we we're glad to report that we see a very strong momentum build up in this application. April 2025, we ended with a record ARR of 2,300,000, even a bit more than 2,300,000.0. That's represent almost 300% growth year on year, you know, compared to the previous year ARR.

And just month to month, this represents 15% growth. So, basically, we think there's a lot of, let's say, movement or momentum building up, and you see you can see this clearly see it in the it is early chart of 2025. '1 point '7 in January in ARR, 1.861 in Feb, and then over 2,000,000 and now two points over 2,300,000. Then clearly a strong momentum. We see a lot of, let's say, traction.

And I think the most important things regarding the media blast app is we see good market fit. So the so we see a lot of demand, and this demand is, like it's continued growing. So it's not like we're reaching any any plateau, any any glass ceiling. There's still a lot of demand, and we continue to report a very strong result in this specific application as well. Actually, because of this application, we also see a lot of other positive indicator within the within the financial result, whether it's the cash position and other important indicator as well that improved because of this specific application.

And last quarter, when we did the earning call, was the ending of the fiscal year of 2024. And, obviously, we took this opportunity also to discuss what the company goals for 2025. Right? Like, what we are trying to achieve. And I wanna run with you together, let's say, using the opportunity now that we already one quarter into the into the new year to see, okay, where do we stand, whether we meet or we are when we think about meeting the goals that we discussed in the last earning call.

And I said the first one, we discussed that the company would like to grow 2025 by 25%, you know, to 40,000,000, and that's a big ambitious goal. And I would say, yeah. This quarter, we only grew by 2%, but we still believe because, you know, traditionally for us, q one and q two start slow usually, and then we pick a lot of momentum. The company still believe we can reach this goal of 40,000,000 revenue for the entire end of 2025. So I would say we still need to prove it, but but we are still bullish about meeting this goal as well.

And we talk also about strengthening the company profitability. We would like to achieve six straight quarters of positive adjusted EBITDA and positive cash flow. So in this regards, big check. Right? Both the adjusted EBITDA and the cash flow generating for operation activity were positive in q one twenty twenty five.

We talk about AI driven innovation, and, actually, I would glad to report there's a lot of innovations that is AI powered or AI related going on, especially around our proposal, but not only. So, basically, we see, let's say, a very AI integration to all the different technology the company is developing, and that's very exciting. And I'm sure we can share later down the year a lot of this innovation with our shareholders as well. And last but not least is we would like to grow our SaaS recurring revenue to around 4,000,000 to 5,000,000. And, again, over the big check as well, we see the adjustment to meet the blast up.

We're already $2.6263000.000. That's mean and there's a lot of momentum. Around 10% month on month growth just for this specific app. So we definitely believe that we can meet this target by the end of twenty twenty five as well. So I think, like, all in all, we set, like, four very ambitious goal for the entire year, and I see, like, we can, like, on track to meet most of them, if if not all of them, and that's a positive sign for us as well.

Last but not least, I would like to talk about the current share price and, obviously, talk about comparable companies as well. So if you look at the current share price, which is around 27, I think, or 29¢, if you look at these numbers for May 7 and you look at comparables, so we clearly see there's a lot of upside to be made within the stock. If you're looking at EV to gross profit, we talk about more than 500% upside. So that represent 1.5 as a share price or a target share price. And if you're talking about EV to be EBITDA, then we're talking about 200% upside, and that represent around 60¢ share price.

So I think, like, many of them believe the common share price is deeply undervalued. There's a lot of money potentially one can make with the Ethco stock as well. And, again, all in all, I think it was a positive quarter for us. You know? We started 2025 in the right tone.

And more importantly, when you look a bit inside and you look at what we call it quarterly KPIs, you know, whether it's the cash position, cash flow, and the momentums that we see in SaaS revenue, then, actually, it's not good. It's very positive, even more than good. So I see, like, positive quarter for us, and with the important KPI, I would say even an excellent quarter for us all in all. And now I would add it, I guess, to our CFO to talk about the financial result in more details.

Amit Conforti, CFO, Agcor: Thank you, Andre. Second okay. Good morning, everyone. Before beginning the financial overview, I would like to remind you that the following discussion will include GAAP financial measures as well as non GAAP results. All amounts will be presented in Canadian dollars.

In the first quarter of twenty twenty five, we saw a strong increase in our APAC revenues, sustaining the momentum from 2024. In addition, we saw a big increase in cash flows from operating activity, improving the company financial flexibility. Let's review in more detail. So for the three months ended 03/31/2025, we delivered revenue of $7,000,000 compared to $6,900,000 in the same period of 2024, an increase of $100,000 or 2%. Gross profit for the three months ended 03/31/2025 was $3,100,000 compared to $3,100,000 in the prior year.

As for gross margin for the three months ended 03/31/2025, they were 44% compared to 45% in the same period last year. As for operational expenses, R and D expenses for the quarter were $600,000 compared to 600,000 in the prior year. SG and A expenses for the quarter were $2,800,000 compared to $2,700,000 in the prior year. Operating loss for the three months ended 03/31/2025, was $300,000 compared to $200,000 in the same period last year, an increase of $100,000 or 51%. Net loss for the three months ended 03/31/2025, was $200,000 compared to $400,000 in the same period last year, a decrease of $200,000 or 49%.

As for revenues and gross profit, when looking at the quarterly result, we see that revenues and gross profit remain relatively the same. We are continuing to prepare the ground for a much stronger second half of the year, aiming to keep the yearly positive trend. As for geographical revenue breakdown for Q1 twenty twenty five, revenue in APAC saw a massive 85% year over year increase. This is driven primarily by acquiring of new clients. Revenue in EMEA decreased by 42% and in North America by 25%.

This is mainly due to stopped activities. Net cash from operating activities. In the three months ended 03/31/2025, we kept on generating cash from operating activities in the amount of 263,000 compared to $13,000 in the same period last year. This improvement in cash flow is mainly caused by the increase in our revenue from APAC, which also comes with favorable payment terms. In terms of financial position, we had cash and cash equivalent of $10,600,000 as of 03/31/2025, compared to $10,800,000 at 12/31/2024.

Total working capital amounted to $7,100,000 compared to $7,300,000 at 12/31/2024, a decrease of $200,000 or 1%. As for the liability side of the financial position, we can see that the company is still debt free. Adjusted EBITDA. The quarterly non GAAP results reflect adjustment for the following items: depreciation and amortization, share based payments and other nonoperational items. For the three months ended 03/31/2025, adjusted EBITDA was $208,000 compared to $201,000 for the same period in 2024.

With that, I will turn the call back to Nick.

Nick Campbell, Head of Investor Relations, Agcor: Thank you, both of me and Tanomari, for your comments. At this time, we'll move over to the Q and A portion where there's been a number of pre submitted questions. I want to start with q one delivered a strong increase in cash flow from operations. We saw it go from about 13 k in the in the q one of twenty twenty four to over 260,000 in q one of twenty twenty five. Can you just provide a bit of color on what's really driving that improvement in cash flow from operations?

Omri Brill, CEO and Founder, Agcor: Hey. That that's a fair fair remarks. Maybe, Amit, you would like to answer this one. I know you already comment on it, but maybe you would like to follow it up.

Amit Conforti, CFO, Agcor: Yeah. Sure. So, as I mentioned, the main reason is the increase in revenues from APAC, which comes with a favorable, payment terms.

Nick Campbell, Head of Investor Relations, Agcor: Very good. Moving on to the second question here. We have, you know, the APAC market market seemed to really be outperforming this quarter. Can you just provide a bit of information on what's working there? Can you apply the strategy to the other markets in which you operate in?

Omri Brill, CEO and Founder, Agcor: Actually, that's a very good question. I would say a few things. A, when you look at historically, I would say you see we see some fluctuation from time to time in the different regions. Right? Let's say, even APAC, which is now, let's say, the leading goals for us.

If you look post COVID, for example, it was went down a lot and then remained plateau, and now it's, like, slowly start to pick momentum and now actually is accelerating in this momentum. So I think, like, we see from time to time that the different region behave differently. This can be related to macroeconomic in, you know, in every region and other factors as well. I think, like, in APAC, what we see probably is, I would say, combination of positive macroeconomic and I think, like, client acquisition as well. And so this would build such a strong momentum in a in this specific region.

And, yeah, we definitely, all the time, look at what's working for us or even not working for us in a specific region and try to copy it or adapt it in our other regions as well. And I think, like, what we like to see more in our region, you know, is tracking our client acquisition capabilities that also would would generate such a positive momentum as well. So I think, like, all in all, we're very happy of what we can achieve in APAC this specific quarter, and we definitely would like to see this momentum carried to other regions as well.

Nick Campbell, Head of Investor Relations, Agcor: Thank you, Omri. And can you elaborate on the the slowdown in North America and EMEA market and if you expect this to continue?

Omri Brill, CEO and Founder, Agcor: So that's actually also a very good question. I would say the following. Like Amit mentioned on his on his report, a lot of this slowdown was was as a result of, let's say, what we call stop activity. And just to give you some color behind, let's say we take EMEA. For example, we used to have a very big tender with the Israeli advertising government advertising agencies that was for five years and actually ended in q one twenty twenty four.

So I think, like, the stop of this specific activity impact, you know, some of the some of the drops that we saw in q four in, let's say, in, for example, in q one twenty twenty five. But let's say if you look forward, q two twenty twenty five, then we didn't then have in in 2024 this type of activity, and that's why we don't believe that we're gonna see such a big drop or such a drop even at all in the EMEA region. And the same logic, MOLA supply also to to North America as well. So I think it it was one of stop activity effects that we saw in this specific quarter, and we believe later down there, we can recover definitely in these regions as well. So we don't expect to see continued deterioration in these specific regions.

Nick Campbell, Head of Investor Relations, Agcor: Very good. Thank you, Omri. Question regarding MediaBlast. It looks to continue growing nicely. Do you see, you know, the demand tapping out, or is there still a lot of room to grow for that app?

Omri Brill, CEO and Founder, Agcor: Good question. We as far as I'm concerned, we're not scrapping the surface over there. Like, there's, like, endless demand, you know, to what we currently deliver, and there's a lot of of room to continue growing within the media blast app. Whether it's introducing additional channels, currently media blast, for example, support within the app itself, Microsoft, and Google advertising. But let's say we now can introduce Meta, for example, or can introduce TikTok, for example.

That's by itself represent a a big uptick and a big room to grow. And like I say, like like, there's no limit for what we can do in a in a middle class compared to the current, let's say, ARR number. So we still a lot is no, let's say, glass ceiling. There's no there's no something that will stop us, you know, like, growing as far as the the company concerned.

Nick Campbell, Head of Investor Relations, Agcor: Thank you, Omari. And your newest app, Proposalie, how's the development going, and can you share a timeline for when that's expected to to go live?

Omri Brill, CEO and Founder, Agcor: Okay. So, actually, it's going pretty well. I think, like, we already have a quite robust up in our end, and we already started the early stages of a closed beta. You could call it alpha beta, you know, closed beta stage. And, basically, we expect, you know, to still be on track, you know, to go out from the close beta stage, you know, to almost a full release in the second part of twenty of twenty twenty five.

So, basically, the app is moving along, and we would like to see some generate revenue generated from from this app in the second part of the year already.

Nick Campbell, Head of Investor Relations, Agcor: Thank you, Omari. Another question here. You know, looking at the targeted 25% growth this year, you know, after a slower q one, what really gives you the confidence that you can achieve that rate in the remainder of the year?

Omri Brill, CEO and Founder, Agcor: So that's a fair question, but I would say q four twenty twenty five give me the confidence. We had a massive You know? Like, if you look at 2024, it started a bit slow, even slower than what we see in this year 2025. And then we had a massive rebound in the second part of the year, whether it's q three and even most of q four. So I think, like, if we continue to see the same behavior and the same trend, and and so we still have a potential to do massive rebound and still need these numbers.

And so, again, shareholders should look how the company started 2024 and our company ended 2024. And if we can copy paste that into 2025, then I think, like, we still can be within the within the ambitious targets that we we we would like to meet.

Nick Campbell, Head of Investor Relations, Agcor: Very good. Thank you, Omri. And that concludes the q and a for the call. I wanna give you an opportunity, to final thoughts before ending the call here.

Omri Brill, CEO and Founder, Agcor: So I I would end with with the way Again, obviously, thanks everybody that joined today's call. Like I said, in the first look at the quarter result, you can say, okay ish quarter. But if you took a deeper look and you see there's a lot of things that we can we can and should be proud of. And a lot of metrics moving the right direction.

There's a lot of exciting movement within what the company do. Whether it's the media blast app, you know, we see, like, tremendous growth in the in the application ARR, and that, let's say, I think, been undervalued. You know, we should get better multiple for this type of revenue. We see tremendous growth in in our APAC region, and this reflect, you know, everything the company doing. There's a lot of takeaways we can copy from this region to another region as well.

Positive cash flow, positive cash position. So all in all, I'm very happy about this specific quarter, but I'm more happy, excited about what 2025 can bring to to our company and to the shareholders.

Nick Campbell, Head of Investor Relations, Agcor: Thank you, Omari, and thank you, Amit, for your comments today, and thank you all for joining. We appreciate your continued interest and support. Thank you again, and have a great rest of your day.

Omri Brill, CEO and Founder, Agcor: Thank you.

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